401k Loan & Stock Sales Questions

[gmk]

I have an outstanding loan from my 401k. I'm unemployed since Dec '09. The administrator of my 401k has notified me that the loan will need to be repaid in total in March, which I can't do, so they will issue a 1099 for the loan amount which I will owe taxes on. This will occur before I file my Ch7.

Does the 1099 count as income for the means test calculations?

This brings up another question:

I sold some shares of common stock in Oct '09. The check deposit was made on Nov 03, 2009. The shares were sold at a loss, I received less money than I paid for the shares. Does the cash received count as income toward the means test? Or is this a sale of assets with the cash used for expenses and bill paying?

[whipster1]

The 401k: You would put that amount in whatever month you received it for means test purposes. The stock sales: You had a capital loss, so no "income" but the cash you receive is an asset...and yes you can use the cash for necessary living expenses and lawyer fees etc.

Hope this helps

[gmk]

The 401k: You would put that amount in whatever month you received it for means test purposes. The stock sales: You had a capital loss, so no "income" but the cash you receive is an asset...and yes you can use the cash for necessary living expenses and lawyer fees etc.

Hope this helps

Thank you for response.

You said, "The 401k: You would put that amount in whatever month you received it for means test purposes." Do you mean the month that I actually received the cash (2+ years ago) from the loan or the date that they issue me the 1099?

Thanks again

[whipster1]

If you received the money that long ago it would not be in the means test, however you will owe the IRS for the tax and they will be shown as a "priority creditor" in your filing...the 1099 just sets up the taxable event which is the failure to pay back the loan....and you can't discharge that tax liability ya gotta pay it.

[gmk]

Thanks again. That's the answer I hoping for. If there's any consolation about a significantly reduced income, the amount I'll owe the IRS for the 1099 will be substantially less than when I was employed. Twisted logic I suppose.

Thanks again.